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Posted 22nd March 2022

Could the Spring Budget bring IR35 reforms to small businesses?

For the contracting and recruitment agency worlds, 2021 was a year of significant change and challenges. With restrictions posed by the COVID-19 pandemic still very much in place, Brexit and IR35 reforms for medium and large businesses in the private sector coming into force, there was a great deal to navigate.

Now, with rumours that the IR35 reforms could be extended to small businesses, could 2022 present its own slew of challenges to the contracting industry?

Spring Budget IR35 reforms

IR35 reforms for small businesses

Industry experts have questioning for quite some time when (not if) reforms will be extended, which would ultimately mean that small businesses engaged with contractors would be handed the responsibility of determining said contractor’s status under IR35 legislation.

Whilst it is thought that there is a strong possibility that the government could announce the extension to small businesses in the Spring Budget, due to be announced on 23 March, many believe that its roll out will not be for quite some time, in light of the challenges faced by the industry following the introduction of the same reforms to the public sector and last April’s reforms for the medium to large businesses in the private sector.

HMRC has itself stated that it is ‘too ‘early’ to assess the 2021 rules appropriately; until the full impact of these changes can be assessed thoroughly, it would be extremely risky to extend to further businesses.

Of course, the ‘soft-landing’ of IR35 reforms following their introduction in April 2021, will come to an end in April – this means organisations that have made a ‘genuine error’ that has ultimately led to non-compliance will be hit with a financial penalty.

Including small businesses within private sector IR35 reforms as this early stage could lead to a whole host of challenges for the industry. However, the team here at Exchequer Solutions are expertly equipped to support our clients through the transition should it come into force, just as we did for last year’s reforms.

If you would like more information on IR35 and what it means for your agency, contact the Exchequer team today!

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